Correction Hits the Crude Market

The crude markets went into correction last week and gave back almost $6/barrel. In addition, refinery maintenance in Chicago started to finish up causing winter RVP to flow into the cash price point in Chicago on gasoline. Saudi Arabia and Russia keep hinting at a private side deal to secretly raise output starting in November. The IEA also lowered their demand forecast for 2019. And hurricane Michael destroyed demand down south, including most of the infrastructure along the panhandle in Florida. Also, in a surprise, President Trump is discussing variances for purchases of Iranian crude for countries that tried to curb purchases in the past months. And last but not least, economic downturn in China and the U.S. due to trade wars overtook the airwaves for a few days as well. All of these events caused a major downturn in crude prices. The main event going into this week is the political tension between Saudi Arabia and the rest of the world surrounding the disappearing journalist. Any major announcement of sanctions could cause a spark for retaliation which in turn could make crude prices soar. All eyes are on deck.

In local news, retail prices for gasoline and diesel are starting to slowly come down. I would expect prices to slowly ease depending on what happens this week.

Propane prices climbed in the past week due to an increase in demand and potential supply tightness going into winter. In addition, corn drying is in full swing. We expect propane prices to continue to climb going into winter unless crude prices collapse.

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